Updated May 16, 2023 at 4:46 PM ET
President Biden and top congressional leaders emerged from a meeting at the White House expressing more optimism about a path to address the nation's borrowing limit, but admitted both parties remain far apart on the specifics of a deal.
"I think we set the stage to carry on further conversations," House Speaker Kevin McCarthy told reporters after the meeting Tuesday afternoon. "The president agreed to appoint a couple of people from his administration to sit down and negotiate directly with my team, so I found that to be productive personally."
McCarthy added he'd like to see the appointed individuals begin meeting as soon as today and "just start meeting until we get this done."
Leading up to the meeting, McCarthy had been critical of the process of discussions with the White House. But his tone shifted somewhat on Tuesday, with the speaker saying he thinks it is possible to get a deal by the end of the week and calling the meeting "more productive" than the one he had with the group last week.
"The structure of how we negotiate has improved," he said, noting: "That doesn't mean we are going to get to an agreement. All it means is I think the process is a better process."
Senate Minority Leader Mitch McConnell, R-Ky., said Biden's appointing a point person for negotiations is similar to what McConnell recommended former President Trump do in 2019 when there were similar debt default concerns.
"Do you think he wanted to negotiate with Speaker Pelosi? Of course not — I said, 'You have no choice,' " McConnell said.
Biden also called the meeting "productive," but said there's still work to do to make sure the U.S. avoids defaulting on its debt.
"Policy differences between the parties should not stop Congress from avoiding default," Biden said after the meeting, adding the leaders will "speak regularly over the next several days" as staff continues to meet daily.
Senate Majority Leader Chuck Schumer told reporters all leaders agreed to continue working toward a bipartisan bill that could clear both the House and Senate.
"Default is a disaster — full stop — and everyone understood that in the room," Schumer told reporters, stressing the meeting "was all respectful."
Treasury Secretary Janet Yellen sent top leaders a letter late Monday reiterating the U.S. could hit the debt ceiling as early as June 1.
Biden cuts a planned trip short as the debt limit deadline looms
Biden is set to leave Wednesday for a trip to the G-7 summit in Japan and was planning to travel afterward to Australia to meet with the leaders of what's known as the Quad: the U.S., Australia, Japan and India. On the way to Sydney, Biden had planned to stop in Papua New Guinea to meet with leaders of Pacific Island nations.
But with the debt ceiling deadline looming, Biden decided to cancel the second half of his trip.
"I'm postponing the Australian portion of the trip and my stop in Papua New Guinea in order to be back for final negotiations with congressional leaders," Biden said Tuesday after the meeting.
On Tuesday morning ahead of the meeting, McCarthy stopped short of suggesting that Biden should cancel his trip, telling reporters: "Look, the president is the president of the United States, he can make that decision one way or another. But all I know is we got 16 more days to go. I don't think I'd spend eight days somewhere out of the country."
Potential areas of common ground
A source familiar with the discussions, who spoke on condition of anonymity to describe private negotiations prior to Tuesday's meeting, said there were potential areas of common ground between the two sides, including clawing back some unspent COVID aid money (roughly $60 billion), and permitting reform to speed up approval for new energy projects.
But the two sides were still far apart on spending caps for federal programs for some length of time (the White House is pushing for a two-year timeframe, but House Republicans want one that lasts 10 years) and new work requirements for adults without dependents who receive support from safety net programs like food stamps. They also remain divided on "revenue raisers" like closing loopholes in the tax code, the source said.
The source described staff conversations as very productive, noting that they met over the weekend and through Monday.
For weeks, the White House insisted the administration would not negotiate unless Republicans agreed to first pass a clean bill to increase the debt limit without any conditions. But the president signaled he was open to some of these ideas, which were included in the bill that the House approved last month, including using savings from unspent COVID funds. He noted he voted for the "tougher aid programs" that are in the law now, but he thought any new work requirement rules should be different for Medicaid and was waiting to see the details of what Republicans were proposing.
Progressive Democrats on Capitol Hill rejected changing any of the current rules for food stamps and raised alarm bells that this was part of the negotiations.
"The president has to walk a very narrow line," said Washington Rep. Pramila Jayapal, who chairs the Congressional Progressive Caucus. "This is a nonstarter for so many of us. We're hearing from people in our districts who are suffering with the highest levels of hunger we've seen in quite some time — since COVID times — so no, this is not a time for us to be instituting work requirements."
On Tuesday morning, McCarthy said the issue of work requirements is a red line for him. He also argued there was bipartisan support for these kinds of rules for all government programs, not just some, and as a senator, Biden voted for similar rules.
"[Have] the Democrats become so progressive, so far to the left, they're changing their policies now and they want to put the country in default?" McCarthy asked.
Democratic aides say they have pressed for tax increases as part of any spending cap deal. But last week Rep. Dusty Johnson, R-S.D., called revenues another red line for McCarthy.
Neil Bradley, the executive vice president and chief policy officer for the U.S. Chamber of Commerce, is urging lawmakers in both parties to reach a deal. On C-SPAN Monday he said "there's a real risk for miscalculation" for lawmakers to not leave enough time to finalize a deal and approve it before the early June deadline for avoiding a default.
Similarly, a group of Wall Street and business leaders pressed negotiators to reach a deal and avoid default. In an open letter to Biden and congressional leaders sent Tuesday, the group — which includes executives at Goldman Sachs and Nasdaq — warned of the "potentially disastrous consequences of a failure by the federal government to meet its obligations."
"Large amounts of our $31 trillion debt are held by pension funds, individuals, and other governments. The inability to incur new debt would also threaten the government's ability to pay its other bills, potentially including some payments to Social Security or Medicare recipients," the letter said. "This cannot be allowed to happen."
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